Formus seeks delay in issue of telecoms licences

A Telecommunications company, Formus Communications Ireland Ltd, will ask the High Court next Monday for an order preventing the Office of the Director of Telecommunications Regulation from granting four narrowband communication licences that day.

The company was given leave yesterday to serve notice on the director, Ms Etain Doyle, of its intention to apply for the interlocutory order.

Formus, along with Eircom, Esat and Princes Holdings, is one of four companies which became eligible to obtain broadband licences from the director last September but, unlike the other three, it failed to secure a narrowband licence.

The Irish company is a subsidiary of Formus Communications Inc, an international high-speed broadband wireless services company with operation and licence agreements in Europe.

Mr John Gordon SC, for Formus, told Mr Justice McCracken yesterday his client was not terribly upset by its failure to get a narrowband licence.

However, on February 21st last, one of the unsuccessful applicants for the broadband licences, Broadnet Ireland Ltd, had taken proceedings seeking to quash the director's refusal to grant it a broadband licence.

As a result of this challenge, the director had decided she could not issue broadband licences until the litigation was disposed of but had indicated she intended to go ahead with the issue of narrowband licences. This put his client at an unfair disadvantage since it was the only one of the four broadband companies not to get a narrowband licence.

While the director might well feel she had a problem, none of the licences - broad or narrowband - should be issued until the litigation was cleared up, counsel argued. Formus was the innocent victim of this litigation.

In an affidavit, Ms Terri McNulty, chief executive of Formus, said her company had already spent £1.1 million (#1.4 million) on its application for licences and a further £1 million on start-up costs. Its financial projections predicted revenues of £300 million over the next 10 years through getting a licence.

If Formus's entry into the market was delayed by weeks or months behind its competitors, not only was financial loss inevitable but, if the period of delay was prolonged, the very viability of entry into the market was threatened.

Formus stood to lose not only the cost of its investment to date, but also the value of its proprietary interest in the broadband licence and the projected future profits that would accrue indefinitely.

If the director was to issue narrowband licences to its three main competitors - Eircom, Esat and Princes Holdings - they could immediately commence business as service providers on the domestic market whereas Formus could not.